Where will arbitration proceedings take place for a Dq Treat franchise, considering the standard Operating Agreement terms?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
ment contains a covenant not to compete that is inconsistent with North Dakota law, the covenant may be unenforceable.
- B. Notwithstanding anything contained in Paragraph 12 of the Operating Agreement, any arbitration proceeding shall take place in the city nearest to the authorized location in which the American Arbitration Association shall maintain an office and facility for arbitration, or at such other location as may be mutually agreed upon by the parties. Any provision requiring franchisees to consent to the jurisdiction of courts outside North Dakota or to consent to the application of laws of a state other than North Dakota may be unenforceable under North Dakota law.
Source: Item 17 — The following paragraph is added to the end of Item 17 of the Disclosure Document: (FDD pages 70–378)
What This Means (2025 FDD)
According to the 2025 Dq Treat Franchise Disclosure Document, the location of arbitration proceedings depends on the state where the franchise is located. For franchisees in North Dakota, any arbitration proceeding will occur in the city nearest to the authorized location where the American Arbitration Association maintains an office and facility for arbitration. However, the parties can mutually agree to another location. For franchisees in Washington, the arbitration or mediation site will be in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation.
These stipulations are addenda to the standard Operating Agreement, designed to comply with specific state franchise laws. Without these addenda, the standard Operating Agreement might dictate a different arbitration location, potentially less convenient for the franchisee. The North Dakota addendum also addresses concerns about covenants not to compete, releases in connection with renewals, choice of law, waivers of punitive damages, waivers of jury trials, and franchisee consent to termination or liquidated damages, ensuring these aspects align with North Dakota law.
The Washington addendum further emphasizes the importance of the Washington Franchise Investment Protection Act, stating that its provisions will prevail in case of conflict of laws. It also clarifies that no statement or acknowledgment signed by the franchisee can waive claims under Washington franchise law or disclaim reliance on franchisor statements. This protection is significant for franchisees, ensuring their rights are upheld under state law, regardless of conflicting terms in the franchise agreement.
Prospective Dq Treat franchisees should carefully review the addenda applicable to their specific state to understand their rights and obligations regarding dispute resolution and other legal matters. It is also advisable to consult with a legal professional to ensure full comprehension of the franchise agreement and its implications within the relevant state's legal framework. Understanding these location-specific stipulations is crucial for franchisees to protect their interests and navigate potential disputes effectively.